🚨 Savings Tax Update! 🚨
HMRC has shed some light on savings taxes, so here’s what you need to know! It’s all about how much interest you earn and how it fits into your tax situation.
👉 If you’re employed or getting a pension and earned £60 in interest during the 2024/2025 tax year, you’re in the clear! That’s below the tax-free savings allowance, which means you don’t owe any tax on it. Plus, your bank already reports any interest to HMRC, so no need to worry.
💡 For most basic rate taxpayers, you can earn up to £1,000 in interest each tax year without paying tax on it. If you’re a higher rate taxpayer, your allowance drops to £500. And for those on the additional rate, sorry folks, it’s zero!
📈 Looking ahead to April 2027, there are major changes coming. Cash ISA allowance will be trimmed to £12,000, with the remaining £8,000 set aside for investments. Plus, tax rates on interest earnings are climbing – basic rate goes from 20% to 22%, and higher rate from 40% to 42%. Those on the additional rate will see a rise from 45% to 47%.
💰 Want to grow your savings tax-free? ISAs are your friend! You can stash up to £20,000 annually into them, balancing between cash ISAs and stocks & shares ISAs as you choose.
Keep an eye on these updates if you’re a saver! Got questions or thoughts? Drop them in the comments! 💬
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